Focus on Powell from the Fed, the US NFP, and China as NZD/USD Starts The Crucial Week On The Back Foot Around 0.6200

NZD/USD declines to 0.6210 after recording its first weekly gain in five weeks as early Monday's mood hurdles test the buyers of the Kiwi pair. The quotation does so by observing market signals of caution ahead of Chairman of the Federal Reserve (Fed) Jerome Powell's semi-annual testimony and the February US jobs report. The National People's Congress' yearly gathering in China may have strengthened the pullback steps (NPC).

According to the most recent reports, China NPC expects moderate growth for the current year of 5.0% compared to market forecasts of 6.0%. In addition to the slower-than-expected annual GDP growth of 3.0%, which was reported, geopolitical worries were also raised and had an impact on mood and the NZD/USD exchange rates. Outgoing China Premier Li Keqiang said, "China should support the calm growth of cross-Strait ties and progress the process of China's "peaceful reunion," but also take firm measures to oppose Taiwan independence."

Other factors included lately disappointing US statistics and a decline in US Treasury bond rates from their multi-year peak, which enabled purchasers of the NZD/USD to record their first weekly gains in five weeks. In spite of this, the US ISM Services PMI for February came in at 55.1 compared to market estimates of 54.5 and forecasts of 55.2. The Price Paid sub-index, which measures inflation, decreased slightly from 67.8 to 65.6 in February but still outperformed experts' expectations of 64.5. In the same time frame, the Jobs Index increased from 50 to 54 and the New Purchases sub-index increased from 60.4 to 62.6. Previously in that week, the US Durable Goods Orders for January declined while the Conference Board’s (CB) Consumer Confidence also showed mostly negative details.

It should be noted, however, that the Federal Reserve (Fed) discussions stayed hawkish and attempted to support the proponents of the US Dollar while also driving up the rates on US Treasury bonds. According to Reuters, San Francisco Federal Reserve Bank President Mary Daly stated over the weekend that interest rates will need to rise and remain there longer than anticipated if inflation and labor market statistics continue to come in stronger than expected.

In the meantime, US Treasury bond rates briefly retreated from their multi-month peak before the US Dollar was pressured and the NZD/USD buyers regained control. The cause could be related to the unimpressive US data and the market’s receding fears of recession, primarily supported by news from China. Despite this, the yield on US 10-year Treasury bonds increased to their greatest levels since November 2022 before declining to 3.95% at the latest, while the yield on the two-year equivalent approached the levels of July 2007.

Despite these maneuvers, Wall Street was able to finish in the black, but by press time, the S&P 500 Futures had written slight losses.

NZD/USD traders should watch the statement of Fed Chair Powell, China's inflation statistics, and reports from the China NPC in the near future for obvious cues. The US employment data for February could then influence how the Kiwi pair trades. Considering the recent softening of US statistics, it is possible that the pair buyers will receive a pleasant surprise.